China search firm Baidu profit smashes Street view

LOS ANGELES (Reuters) - Top Chinese Internet search firm Baidu Inc (BIDU.O) smashed quarterly profit forecasts as advertisers flocked to its new keyword system amid Google Inc's (GOOG.O) high-profile departure from China, sending its shares skyrocketing.

Baidu -- the fast-growing search engine founded in 2000 by charismatic entrepreneur Robin Li -- said it foresaw a 67 percent to 70 percent leap in second-quarter revenue, also easily outstripping Wall Street targets.

The shares in the fledgling company have more than doubled this year on hopes it will benefit from Google's decision to shutter its Google.cn search site. It is trading at an expensive 65 times 2010 earnings compared with Google's 19.5 times and Yahoo Inc's (YHOO.O) 26.

On Wednesday, its American Depositary Shares jumped 13 percent to almost $700 in after-hours trading from a regular session close of $621.38.

Baidu, whose name comes from a Song dynasty poem about a man searching for his love, has grown from a tiny player operating out of a dingy Beijing hotel room to China's top search company on a sprawling 91,500 square meter campus.

The company, which commanded over 64 percent of China's search market in the first quarter versus Google's 31 percent according to Analysys International, posted first-quarter net earnings of $70.4 million, or $2.10 per share. Analysts expected profit of $53.6 million, or $1.51 a share, according to Thomson Reuters I/B/E/S.

SLOW BOAT FROM CHINA

Investors are now monitoring the impact on Baidu's longer-term operations from Google's highly public spat with Beijing and its subsequent withdrawal from the world's largest Internet market by users with more than 400 million clients.

Its search market was worth 1.95 billion yuan ($286 million) in the first quarter, up 43 percent from a year ago, said Beijing-based research firm Analysys

In March, Google relocated its servers to Hong Kong from China and shut its local search site after saying it would not submit to censorship laws after a serious hacking incident that the U.S. search titan said originated from that country.

Li, a hands-on chief executive, is still deeply involved in the research nuts and bolts of Baidu's new business areas and avid email user.

First-quarter revenue rose 60 percent to a record $189.6 million, compared with the firm's forecast of between $176 million to $181 million and the average analyst expectation of $180 million.

It expects second-quarter revenue of $268.1 million to $274 million, compared with Wall Street's forecast of $240.38 million.

($1=6.827 Yuan)

(Reporting by Melanie Lee and Edwin Chan; editing by Anshuman Daga, Matthew Lewis and Andre Grenon)